Trudeau takes charge of the fed-prov file

iPolitics Insights

On climate change, he can afford to tune out the screams from the premiers

Prime Minister Justin Trudeau greet Saskatchewan Premier Brad Wall as he arrives at the First Ministers meeting at the Museum of Nature Monday, November 23, 2015 in Ottawa. THE CANADIAN PRESS/Adrian Wyld

Justin Trudeau has identified three policy files as personal priorities for his government: Canada-U.S. relations, federal-provincial relations and reconciliation with Canada’s indigenous peoples.

The first two are the top files on any prime minister’s desk (or should be). The third reflects the impact of the Truth and Reconcilation Commission’s landmark 2015 report and Trudeau’s impressive outreach to, and empathy with, Canada’s First Nations, Métis and Inuit.

Both the Canada-U.S and fed-prov dossiers suffered from mismanagement and neglect under the previous government. By the time Stephen Harper left office a year ago, Ottawa and the White House were barely on speaking terms. U.S. Ambassador to Canada Bruce Heyman couldn’t get meetings with Conservative ministers, who had been ordered by the centre not to see him. As for the provinces … during nearly a decade in office Harper met with provincial and territorial premiers as a group only once. He preferred to manage the federation file on a case-by-case basis, in solo meetings.

Trudeau already has restored Canada-U.S. relations to their most harmonious terms since the Mulroney-Reagan/Bush Sr. years — arguably the best years the relationship ever had. He’s done it the way Brian Mulroney did: by personally investing in the relationship between the PM and the president, with results that were evident in Trudeau’s visit to Washington in mid-March, and Barack Obama’s return visit and address to Parliament in late June.

While challenging files remain at the ministerial level (such as striking a new softwood lumber agreement to replace the one-year interim “standstill” deal that expires Wednesday), senior officials are working through them. That reflects leadership at the top.

On federal-provincial relations, fence-mending began during the transition between governments last October, when Trudeau invited the provincial premiers to join him at the COP21 climate conference and met with them in Ottawa in mid-November prior to the Paris summit in December. Subsequently, there was a First Ministers’ Meeting on climate change in Vancouver in early March, where a carbon price was discussed — but not agreed upon.

But it’s on the way, as Trudeau told the House last week, at the very hour federal and provincial environmental ministers were meeting in Montreal. Three provinces — Saskatchewan, Newfoundland and Labrador and Nova Scotia — walked out in protest.

The three walkout provinces all have different issues with Trudeau’s carbon price announcement. Saskatchewan Premier Brad Wall wants his province to receive credit for carbon capture and sequestration, particularly at the province’s coal-burning Boundary Dam power plant, which is projected to capture up to 1 million megatons of CO2 per year. Four Saskatchewan coal-driven power plants account for 44 per cent of fuel emissions and 70 per cent of the province’s GHG emissions. Wall also says he’s concerned about the impact a carbon tax might have on Saskatchewan farm families.

Newfoundland has renewable hydro resources but also offshore oil — so there’s a question of balance; Environment Minister Perry Trimper walked out of the meeting on the instructions of his premier, Dwight Ball, but spoke of being “railroaded” by the feds and accused Trudeau’s government of taking a “top-down” approach after “all that hard work and effort” by the provinces.

In Nova Scotia, where there is no coal shortage, the provincial utility still generates more than half its power from coal. But as Dalhousie professor Larry Hughes also notes in a piece for the Policy Options website, Nova Scotia already has practically met Canada’s 30/30 target of reducing GHG emissions to 30 per cent below 2005 levels by 2030, being 29.4 per cent below in 2014. No other province came close.

Notley has put a price on her own support for carbon pricing: Trudeau approving at least one oil pipeline to tidewater. No worries there.

But political considerations are different. Nova Scotia’s Liberal Premier Stephen McNeil is going into an election in 2018 and doesn’t want to carry a carbon price into it before tax refunds flow to voters. (In Nova Scotia, Liberals are Liberals, with no distinction between the federal and provincial kinds.)

As it happens, 2018 is also the year Trudeau’s carbon price kicks in at $10 per tonne, rising $10 per year to $50 per tonne in 2022, which would work out to roughly 11 cents a litre at the pump.

This is not a big deal, and Trudeau already has the support of the four largest provinces in the country — Ontario, Quebec, British Columbia and Alberta — comprising 85 per cent of the population. For the Big Four, there is nothing intrusive or untimely about Trudeau’s carbon pricing policy. B.C. and Alberta already have a carbon price, while Quebec and Ontario are into cap-and-trade regimes for which they (presumably) will receive equivalent credit and recognition.

The B.C. carbon tax is $30 a ton, so the province wouldn’t be looking at an increase before 2021. The tax for transportation, home heating and electricity works out, for example, to 7.2 cents per litre at the pump. But it’s revenue-neutral, with voters receiving tax rebates. It’s easy to understand, easily administered and well supported by voters in perhaps the most environmentally aware province in the country.

The new Alberta carbon tax will come in at $20 per ton in 2017, rising to $30 the next year, so Trudeau’s price wouldn’t catch up until 2019, when Rachel Notley’s NDP government will be looking at re-election. No worries there. Alberta will return the carbon tax to middle class and lower income voters. The feds promise the carbon price will be revenue-neutral, with the proceeds remaining in each province, presumably either through federal transfers or tax rebates.

Notley has put a price on her own support for carbon pricing: Trudeau approving at least one oil pipeline to tidewater. No worries there, either. Of the three coastal projects on the drawing board — Enbridge’s Northern Gateway, TransCanada’s Energy East and Kinder Morgan’s Trans Mountain — it’s clear that Kinder Morgan has the inside political track.

For one thing, Trans Mountain involves twinning an existing route from Alberta to Vancouver, which would triple capacity to nearly 900,000 barrels per day. For another, there is significant support for the project (along with some opposition) from First Nations along the route because of the jobs and procurement contracts it promises. Third, while Vancouver Mayor Gregor Robertson opposes the project, he’s also a close ally of Trudeau. The mayor will just have to get over it.

The Trudeau government also recently approved the Pacific NorthWest LNG pipeline, a project that would move light natural gas from eastern to northwestern B.C. at Kitimat. The price of LNG may be in the basement and the project’s proponent, Petronas of Malaysia, may be having second thoughts because of weak markets, but it’s been approved with 190 conditions — which ought to tell you where the Trudeau government is coming out on Trans Mountain.

Trudeau needs something to announce at COP22 in Marrakesh, Morocco, which runs from November 7-18. That something is the carbon price. He’ll likely be attending the climate change conference during the Remembrance Day break week beginning November 6, and the premiers surely will be invited again. The first ministers will meet on climate change in early December.

The premiers wanted another meeting before that on health care funding, linked to their support for Trudeau on climate change.

Nice try. Under the $41 billion 2004 Health Care Accord, federal funding increased 6 per cent a year for 10 years. In late 2012, then Finance Minister Jim Flaherty told his provincial colleagues the 6 per cent increase would be extended for three years, after which funding would rise by 3 per cent or the rate of inflation, whichever was higher. That target comes due in the next fiscal year, and the Liberals are sticking with that number. (Thank you, Jim.)

Health Minister Jane Philpott will reiterate that in a meeting with provincial ministers next week. She’ll put an offer on the table for home care, not health care. It is what it is.

No meeting of first ministers, and no linkage to climate change.

Trudeau has blown it off. He’s writing the cheques, and he’s in charge of the federal fiscal framework. Quite right.

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